Judge halts purchase of Boston Globe, Worcester Telegram & Gazette

A Worcester Superior Court judge has issued a restraining order that halted the sale of the Boston Globe and Telegram & Gazette to Red Sox owner John W. Henry.

MetroWest Daily News, Framingham, MA

Writer

Posted Oct. 22, 2013 at 12:01 AM
Updated Oct 22, 2013 at 10:17 PM

Posted Oct. 22, 2013 at 12:01 AM
Updated Oct 22, 2013 at 10:17 PM

WORCESTER

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A Worcester Superior Court judge has issued a restraining order that halted the sale of the Boston Globe and Telegram & Gazette to Red Sox owner John W. Henry.

Judge Shannon Frison issued the temporary order as part of a 2009 class action lawsuit filed against the T&G by independent newspaper carriers, according to a story on Telegram.com.

The judge issued the order at the request of attorneys representing the news carriers, who are worried that the sale could prevent their clients from being able to collect a settlement.

"The defendant... is hereby enjoined and restrained from transferring ownership or interest in any of its assets... until further order of this court," Telegram.com quoted Frison in her temporary order. "...The court retains the prerogative to inspect the financial documents of the defendant in order to resolve any disputes..."

In the order, the judge put the "maximum end" of a settlement in the case at $60 million. In essence, the entire sale price of the New England Media Group could be set aside in an escrow account until the case is completed. The case has been in litigation since 2003.

The New York Times Co. and Henry had scheduled to close their reported $70 million sale of the New England Media Group — which includes the Globe, the Telegram, boston.com, and telegram.com — to the Red Sox on Friday, according to Frison's restraining order.

On Monday, the New York Times asked that the judge's restraining order be lifted, and the sale be allowed to go through. In exchange, the Times would set aside a sum of money — to be determined by the judge —to pay any future settlement in the case, the Telegram.com story said.

But the New York Times is not willing to assume liability for this lawsuit just to allow the sale of the New England Media Group to go through, according to Mark W. Batten, the lawyer representing the Times Co.

"I don't think it was ever The New York Times' intent to write a blank check to fulfill this judgment," Mr. Batten said in court Monday.

Batten, representing The New York Times as well as the Globe and the Telegram, said the plaintiffs only should have access to the Telegram's assets, not to the New York Times', or the Globe's.

Abbe Serphos, a spokeswoman for The New York Times, said the judge's restraining order is the only thing blocking the sale. She also said that the fair market value of the Telegram & Gazette's assets will ultimately be determined by the court.

According to calculations done by James M. Galliher, the newspaper carriers’ attorney, the New England Media Group earned $380.4 million last year. But the sale price of $70 million constituted just 18 percent of that total, he said. The Globe is a "distressed property" that is being sold far below its value, he said.

Page 2 of 2 - The Telegram, on the other hand, is not distressed, as it has earned a modest profit every year. But in the sale process, the Telegram, which had $42.1 million in revenue last year, could be considered a negligible part of the deal, he said.

"They could set the value of the Telegram at zero," Galliher said, which could impact the newspaper carriers if the lawsuit is successful.

In the lawsuit, newspaper carriers from the Telegram claim they should be treated as employees, not independent contractors. A Gardner District Court judge, and later the state Appeals Court, have previously ruled in the newspaper carriers' favor.

Frison told the attorneys that she would issue a decision on her restraining order on Wednesday.